~ Strathmore University Centre for Intellectual Property and Information Technology Law (CIPIT)

Intellectual Property, Technology Transfer and Economic Development

Technology is very important in modern production and distribution processes. It is what gives the competitive edge to economies and thus access to technology crucial for economic development. Cutting-edge technology can be acquired either through creation or commercial acquisition. To create one’s own technology, there is need to invest in research and development (R&D), which can be expensive due to huge upfront investments with no guarantee of
commercial success. On the other hand, acquisition of technology has the advantage of lower risk however in some cases choosing commercially proven technology may not be easy or the owner of the tech may not want to sell or licence or may be willing to do so on only on potentially disadvantageous terms.

Technological innovation is critically important for productivity and social welfare. Solow (1957) demonstrated that technological advancement (and increased labour productivity) accounted for most (between 80 and 90%) of the annual productivity increase in the U.S. economy between 1909 and 1949, with increases in the capital/labour ratio accounting for the remainder. Denison (1985) extended and refined this analysis, reaching similar results for the period 1929 – 1982 that 68% of productivity gain due to advances in scientific and technological knowledge. Romer (1990) on the endogenous growth theory that investment in human capital had positive externalities. It is now widely recognized that technological advancement and enhanced human capital are the principal engines of economic growth in the United States and other industrialised countries.

Transfer of technology is a series of processes for sharing ideas, knowledge, technology and skills with another individual or institution (e.g., a company, a university or a governmental body) and of acquisition by the other of such ideas, knowledge, technologies and skills. It mainly refers to any process by which the technical information of one party is acquired or learned by another and successfully incorporated into the latter’s production structure. This information may be embodied in products and inputs or disembodied as knowledge codified in blueprints and formulas or know-how. Alternatively Technology Transfer (TT) may simply involve purchasing an input or service and placing it into production without acquiring know-how. Technology transfer increases the stock of knowledge of the transferee, which forms the basis for further development and exploitation of technology into new products, processes or applications. Full TT generally requires absorbing knowledge about how a process or product works.

From an intellectual property (IP) perspective, types of IP rights may be categorised based on two functions: firstly, IP that aims to stimulate inventive and creative activities: such as patents, copyright, industrial designs, plant breeders’ rights, layout designs for integrated circuits, utility models, trade secrets and secondly, IP that aims to resolve information asymmetries such as trade marks and geographic indications. The relationship of TT with IP rights is dominated by one central issue: Do IP rights help or hinder technology transfer?

The simple existence of a patent for a particular technology is not a barrier in itself to the transfer of technology nor does it guarantee that the technology will be fully exploited by the patentee in all possibly beneficial ways. Much depends on how the exclusive patent rights are designed under the respective national law, how they are deployed and used as a vehicle for technology transfer to the benefit of both a transferor and a transferee. Conversely, the absence of an enforceable patent right does not in itself provide any guarantee of technology transfer. The prospect of using the technology disclosed in the published patent applications and patents is open. However, the transfer of valuable know-how and other background technology that may be useful for the effective commercial exploitation of the technology may only be achieved with the partnership or involvement of the technology originator.